OUTLOOK

"Bearish on Long-Term US Treasuries"

11/13/2007

We believe the yield on the 10-Year Treasury Note will rise to 4.35% or more from its recent low of 4.21% on 11/12/07.  We expect this to occur within the next 8 weeks.

In our opinion, the recent rally in Long-Term US Treasuries has been overdone.  We believe that yields are artificially low as a result of flight to safety.  When the fear level subsides in the market, we would expect to see yields rise on Long-Term US Treasuries.

Mark Yuan, CFA